The heating plant, owned by the state, is being upgraded. Montpelier will install a new distribution network so buildings there can take some of the generated heat.

The state had given the city an ultimatum as new boilers for the plant had to be ordered by the end of the month. The state needed to have an answer from Montpelier officials, because too big of a boiler would create too much energy, effectively becoming inefficient.

Last week, the council voted down the total project, a $3.7 million dollar plan to create the new distribution network.

The four councilors who voted against the plan had said they were concerned about funding the project, when the exact amount to be paid was unknown.

While the city has estimated the project at $3.7 million, the project itself is out for bid.

“We’re unfortunately not going to know [the total] until November,” said Mayor John Hollar. “We have enough contingencies I think built into this whole process to protect the taxpayers from any risk.”

The resolution passed Wednesday allows for the project to be split into sections. Councilors have now approved the first phase of the project. It’s scheduled to serve 12 customers. Plans call for the project to serve up to 34.

The expectation, however, is the project will be funded to completion. How extensive the project ends up being will be up to the council to decide after bids come in this fall.

Wednesday’s vote allows the state to go ahead with its boiler purchase, and for the city to go ahead with its bid process.

The funding comes from an $8 million grant from the Department of Energy the city received. Voters also passed a $2 million bond to cover project costs last year.

After the vote, Hollar said, “I think it's a good outcome for the city and for the state. City leaders hope construction begins in the spring with customers coming online by October 2013.

Passing the first phase of the project allows the council to review the funding for each phase.